Chapter 10 Outline

Chapter 10 Outline - Chapter 10 INR The Globalization of...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 10 – INR The Globalization of Trade and Finance 1) Three characteristics of globalization a) The process in which international trade increases relative to domestic trade; in which the time it takes for goods, people, info, and money to flow across borders and the cost of moving them are decreasing; and in which the world is increasingly defined by single markets rather than by many separate markets. i) Growing importance of international trade to local and domestic economies ii) Cost of moving almost anything around the world is decreasing (1) Easy to produce even low profit margin goods where labor is cheap iii) Most far reaching aspect of globalization is in financial flows (1) By 1990s, trading by private actors exceeded reserves of governments b) Change in amount (quantative) led to a change in the nature of the system (qualitative) i) Role of states in setting foreign exchange rates was fundamentally undermined and that of firms and markets strengthened (1) Private intern. Finanial transanstions dwarf resources controlled by states (2) States have much less ablity to limit the movement of money (3) Firms can move resources and production around the world (4) Comparative advantage is increasingly based on not on natural resource endowments 2) Globalization of Trade a) International trade increased steadily up to ww1. Agreements made on bilateral basis. WW1 destroyed many of these. b) Great Depression i) State Response > Protectionist policies. ii) Any gain in domestic consumption was outweighed by losses in exports
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
c) Bretton Woods i) Following ww2. Leading econ powers agreed on purpose of improving trade cooperation. Pushed power to US ii) Consisted of trade and financial provisions which intended to promote free trade and increase wealth around the world. iii) GATT General agreement on tariffs and trade. Replaced by WTO. d) The Gatt and “NonDiscrimination” i) Members agreed to use tariffs over other methods (quotas) as primary protectionism ii) Slowly decrease tariffs iii) Prior to Gatt > Reciprocity. Bilateral trade agreements. iv) After Gatt > Nondiscrimination (1) Meant that a given state’s tariff on a particular good would be the same for all GATT members (2) Put all foreign producers on equal footing. Faciliated competition according to comparative advantage and improved econ efficiency e) “Embedded liberalism” (1) Great depression –market wont always work self out
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 7

Chapter 10 Outline - Chapter 10 INR The Globalization of...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online